MPs question Olympic budget increase

Claiming that ministers misled Parliament and the public over the true cost of the London Games, the Commons public accounts committee on Tuesday launched a scathing attack on the £5bn cost increases of the event.

The report  examined how the Olympic budget grew from just over £4bn at the time of the 2005 bid to £9.3bn in March last year, with the private sector contribution shrinking from 18 to two per cent of the total cost.

Committee chairman Edward Leigh described the initial £4bn budget estimate as "entirely unrealistic" and warned that public confidence would be further undermined if objectives were not clarified.

The original budget "ignored foreseeable major factors such as contingency provision, tax obligations, and policing and wider security requirements," he said.

"At the same time, the estimate of the extent to which the private sector would contribute funding towards the Games has proved little more than wishful thinking."

The extra £5.3bn of costs identified by the department in March last year included £2.747bn of contingency funding that was initially left out despite Treasury rules, £836m for tax liabilities, £600m for policing and security and an additional £554m for the Olympic Delivery Authority (ODA).

In addition, the government still has no clear idea of what the Olympic legacy will be, despite a doubling of the budget, the MPs warned.

The Department of Culture, Media and Sport was also criticised for its failure to produce a detailed delivery plan for the London 2012 Olympic and Paralympic Games.

The committee expressed concern that, despite the public sector now responsible for an additional £5.9bn, there had so far been no detailed specification of what would be delivered for the money.

Although five legacy promises have been made by the government, the MPs said a 'legacy action plan' due to be published in early 2008 had not yet materialised.

Leigh warned: "Without this essential information, the public will find it hard to be confident in the department's ability to deliver the Olympics programme within the new higher budget."

The committee called on the department to set out what will be delivered and provide an assessment of how well it is meeting those expectations in its annual reports to Parliament.

The findings came the day after a report from the New Economics Foundation and Community Links also called for "cast-iron guarantees" to ensure the deprived Lea Valley area of London benefited from the Games.